If you are a resident of Germany and have earned income from interest, dividends, or other capital gains from your investments, the Anlage KAP form is important for you. After Germany simplified the taxation process in 2009 by taxing capital gains directly at the source, this form became less relevant. However, there are certain situations where you are legally required to submit this form along with your tax declaration.

But more than that, voluntarily submitting it could potentially get you a tax refund. So, in this blog, I will explain when you should fill out the KAP form and later guide you through the process step by step. So let’s get started. If you are familiar with how capital gains are taxed in Germany, you can fast forward to the section where I explain how to fill out the form. For everyone else, here is a quick summary.

Capital gains tax (KapESt) is the tax you pay in Germany on profits from your investments. This includes:

Interest from savings accounts, and fixed deposits.
Dividends, for example from shares
Profits from sales of stocks, bonds, funds and other securities
Income from certificates, for example, on currencies

Note that income from the sale of real estate sales and crypto is not subject to capital gains tax. They are considered economic goods for tax purposes and should be declared in the form "Sonstige Einkünfte" or Anlage SO. Once we know what is taxed, the next important question to ask is how much is taxed.

In Germany, capital gains are mostly taxed at a flat rate of 25 percent. Additionally, there is a solidarity surcharge of 5.5 percent on this 25%, making the total tax rate approximately 26.375 percent.

If you belong to the church, then there is also a church tax, around 8-9% of your capital gains tax.

And how do we pay for it? As I told you earlier, the process was simplified in 2009. Now, banks and financial institutions automatically withhold the necessary taxes and pay them directly to the tax office every year. This is why capital gains tax is also known as withholding tax. Since everything happens automatically, in most cases, filing a tax declaration is not necessary. However, there are situations where you are still required to submit it.

When to Fill the Anlage-KAP

The first and most important case is when you earn capital gains for which no withholding tax is paid at the source. Like income from a private loan or capital gains from foreign investments.
Another situation where you have to submit the KAP form is if you are liable to pay church tax and haven’t done so for your capital gains. Normally you can notify the bank or your financial institution to withhold church tax automatically on your behalf. But if you haven’t made your religious affiliation clear to your financial institution, then you are required to explicitly state this in the KAP form and pay the required church tax on your gains.
The third case has to do with tax refunds. If you were eligible for a refund and it took a long time to be credited, the tax office normally pays an interest on the amount. While these interest payments are good to have, they are also considered taxable income and must be declared here.
This is also the case when you earn interest from a private loan or, for example, when you lend money to another person. Since most private loans do not involve a bank and taxes are not automatically deducted, you are also legally required to fill out the KAP form and pay taxes for such interest earned.

But there are also situations where it could be beneficial for you to submit the KAP form, even if you are not legally required to do so.

For example, if your gains are below the tax-free allowance. In Germany, every individual has a tax-free allowance for capital gains, below which you do not have to pay any tax. This was 801 euros in 2022 and has now been raised to 1,000 euros from 2023 onwards. For married couples filing jointly, this doubles to 2,000 euros.
However, you need to notify your financial institution of this tax-free allowance through an exemption order. If you haven’t submitted one or have submitted one that is too low, you can get back the capital gains tax already withheld on it.
Another case where it would be beneficial for you to fill out the Anlage KAP form is if you have a mix of some profit-making investments and some loss-making investments. In such situations, you can offset the investment gains against losses. If this is with the same broker then it will be taken care of automatically, but if those are with different brokers, and you want to want to offset them against each other then you do it with the KAP form.
Then there is a special situation called Günstigerprüfung, or “Favorable assessment.” This is the case if your personal income tax rate is lower than the capital gain tax of around 25%. Germany has a progressive income tax ranging from 14% up to 42%. If your income tax rate is, for example, 35%, it is an advantage to pay only 25% tax on your capital income.
But what if your tax rate is only 10%, 15%, or 20%? In this case, you can request a more favorable assessment through Anlage KAP, and the tax office will determine the most favorable tax case for you. Of course, you may not get any direct tax relief here, but in some cases, tax rates will be adjusted so that you pay a lower tax rate.
Finally, if there is an error in the tax withheld by your financial institution, you can correct it using the Anlage KAP form. While this is rare, as banks and brokers usually do it with great care, it’s still a good idea to check the tax certificates you receive and claim back any excess taxes paid.

Now, even though Anlage KAP is the main form when it comes to capital gains, two additional forms could also be relevant for you. These are

Anlage KAP-INV
Anlage KAP BET

And knowing the right form to fill, is important.

The KAP form is the standard basic form and is used to record all income from capital assets and for the cases, I mentioned above.

The KAP-INV form is only for income from investment funds that were not subject to domestic tax deductions. For example, if you live in Germany and make capital gains from mutual fund investments abroad, you, have to declare this in KAP-INV form and pay the taxes. I have made a detailed video on the taxation of foreign income in Germany. You can watch it here.

The KAP-BET form is to be filled out if you are involved in a partnership company such as GmbH, GbR, OHG, or KG and have capital gains associated with that.

Now, this blog is only about the KAP form, which should cover most use cases. You can find the video for Anlage KAP_INV on my channel here. For the KAP-BET form, I will consider making a YouTube video in the future. So, please subscribe to the channel and enable notifications.

Now, let’s open Elster which is the free online software from the Tax office, and see how to fill out the form.

How to Fill the Form

As I mentioned, Anlage KAP is an attachment to the basic income tax declaration form or the Hauptvordruck. If you want to know how to fill out the Hauptvordruck, you can watch this video. Once you log in to Elster and start a tax declaration, you can additionally include the necessary forms by going to the bottom left corner, clicking on “Anlagen hinzufügen / entfernen,” and then selecting the necessary form, in this case, the Anlage KAP form.

Anlage KAP is a long-form and consists of 13 sections. But the good news is that as a normal investor, most sections won’t apply to you. Those additional sections deal with very complex tax issues, such as profit withdrawals from your own capital companies, which are better handled by a tax advisor.

In this blog, I want to focus on the standard case of capital income, meaning interest income, dividend income, or stock sales with profits.

Section 1

Section 1 covers “Antrag” or Applications. We discussed the “Günstigerprüfung” or “favorable assessment” earlier. If your income tax rate is lower than the standard capital gain tax of 25%, then you can request the tax office to check what is more favorable for you by ticking this box. It doesn’t cost extra and I would recommend marking it.

You have to mark the checkbox in line 5 if you want the tax office to review the withholding tax you already paid on your capital gains. This is the case if you think you paid more taxes than you were supposed to, and it can happen in one of these five situations:

If you accidentally submitted a lower tax-free allowance to your financial institution.
If losses across your different investments were not properly considered during tax deduction.
If the income is only partially taxed in Germany due to a double taxation agreement, but you paid taxes on the whole income.
If the financial institution didn’t know the original purchase price of your investment and used a higher estimated value to calculate and deduct taxes.

5. If the tax exemption on your profits from domestic fund investments was not properly considered.

I will come to each one of these cases in detail while filling out the corresponding sections. But note that if you request a review of the withholding tax, you must provide further details about your capital gains in section 3.

Section 2

Section 2 is related to Kirchensteuer or Church tax. Mark the checkbox in line 6 if you are subject to church tax, and your broker or bank has not withheld it on your capital gains.

Section 3

Section 3 is important if you have requested a review of the domestic withholding tax that has been deducted by your German bank or broker. You can find the details on the withholding tax already paid on the certificate you receive every year from your financial institution. This certificate usually states which line in Anlage KAP you need to enter the respective figures.

Now, this section has three columns. The first column is for providing the withheld capital gains tax that you believe was not correctly taxed. The middle column is for the corrected amount, and the third column is to explain this.

You must enter the total amount in field 7 and then enter individual amounts according to the type of capital gain in fields 8 to 15. Profits from the sale of shares must be entered in line 8, and profits from the sale of options and futures in line 9. If you have multiple brokers or financial institutions, you should sum up the individual amounts and enter the total here.

Field 10 is for gains from “bestandsgeschützter Alt-Anteile” or protected old shares. These are shares purchased before January 1, 2009, and then sold in 2018 or later. In such cases, there is an exemption of EUR 100,000, which can be claimed as part of the income tax assessment.

Field 11 is relevant if your capital gains were calculated based on an “Ersatzbemessungsgrundlage” or alternative base assessment. This refers to an alternative method for determining the tax base when the regular method cannot be applied. This can happen if you do not provide sufficient information to your financial institution about the original purchase price of your investment. So they may have to assume an arbitrary purchase price and this can lead to a higher tax liability. You can correct that here if that’s the case with you.

Now a common method applied to reduce the taxes on investment gains is by offsetting them against losses from other investments. If you have both gains and losses in one bank or broker, the losses are usually directly offset. However, if you have invested with several brokers, it might happen that losses with some were not properly offset by the profits from others. In such cases, you can use the next fields to correct it.

Enter such losses from shares in line 13, and all other uncompensated losses from funds, ETFs, and other securities in line 12. Note that losses from the sale of securities can only be offset against gains involving the same type of securities. Line 14 is to declare losses from the sale of derivatives, such as options and futures contracts. And finally, line 15 is for losses resulting from assets that became worthless. For example, if you had a capital claim that could not be collected due to the bankruptcy of the company.

Section 4

Now let’s move to section 4. In line 16, you should enter the “Sparer-Pauschbetrag” or tax-free allowance. You have to enter here the amount of the allowance that you have already used or claimed corresponding to the income from lines 7 to 15, 30, and 33. Now this is important because if you had a new broker and didn’t submit an exemption order, you might have paid taxes even though your capital gains were still under the tax-free allowance. In this case, you should enter zero here. In field 17, you should enter the used tax-free allowance for any capital gains that were not included in lines 7-15.

Section 5

Section 5 is for those capital gains that have not yet been subject to domestic tax deductions. This can include peer-to-peer loans, capital gains on foreign investments, and others. Line 18 is for such untaxed income from domestic financial institutions and line 19 is for such income from foreign financial institutions.

The question now is: What is a foreign capital gain and what is a domestic capital gain? To understand that, you need to look at the source. For example, a dividend payment from Apple comes from the USA because Apple is headquartered in the USA, so that would be a foreign capital gain. The same applies to securities; you need to check where the issuer is located. It doesn’t matter whether your broker is abroad or in Germany.

Just that if you have a German broker, they will take care of the tax payments for you. Like in the previous sections, you have to split the amount entered in lines 18 and 19 based on the type of gains.

• In line 20, provide the part of those gains that came from the sale of stocks.

• Enter income from options and futures transactions in line 21.

• Enter losses from all assets except stocks in line 22.

• Enter losses from stocks in line 23.

• Enter losses from futures and options trades in line 24.

Line 25 is for losses resulting from assets that became worthless, such as a company going bankrupt.

If you received interest along with your tax refunds from the tax office last year, enter that amount in line 26.

Section 6

In certain cases, capital gains are subject to standard income tax rates instead of the flat rate of 25%. These are special cases and might not apply to most people with normal investments. Anyhow I will just go through them shortly.

• Lines 27 and 27a are for those who have significant shares in foreign corporations in low-tax countries.

• Line 28 is for income from corporations in which you hold at least a 10% stake.

• Line 29 is for profit from the sale of capital investments such as silent partnerships, and participatory loans.

• Line 30 is for capital gains from insurance contracts concluded after December 31, 2004, and that has been in force for at least twelve years and if the benefits are paid out after the age of 60

• Lines 32 and 32a apply if you have ownership in business corporations.

• Line 33 is for income from hidden profit distributions (vGA).

• Line 34 is for income from special investment funds.

As I said, I am not going into detail regarding these fields. These are mainly applicable for business owners and special institutional investors and most of you can leave them blank. But if you believe some of these might apply to you, it would be more sensible to consult a tax advisor as these cases can get a bit complicated.

Section 7

Section 7 is about capital gains for which a reduced taxation according to Paragraph 34 of the Income Tax Act applies. This can include capital gains if they have accumulated over several years and are received as a lump sum. These are again special cases like family foundations or deferral models. If you have capital gains that qualify for this reduced taxation, you should declare them here.

Again, like section 6, if you believe this is relevant to you, it is better to get the help of a tax advisor. If you have never heard of this before, then it is very unlikely that it applies to you, in which case you can leave it blank.

Section 8

Section number 8 is important because this is where you have to enter the capital taxes that you already paid corresponding to the capital gains that you entered in lines 7-25. This includes taxes, that both your domestic and foreign financial institution has withheld for you.

Now, why is this relevant? The withheld capital gains tax is a kind of advance payment. If your effective tax rate is even lower, it can result in you getting this tax refunded with your tax assessment. This means it is in your interest to enter these tax payments here and not doing this would mean you would be giving away a significant amount of money.

If you’re lucky, you have a good tax certificate from your broker showing how much tax you have already paid at the respective bank or depository. You can simply transfer this amount here, along with the solidarity surcharge that applies to the capital gains tax and any potential church tax in lines 37, 38 and 39.

The foreign tax already taken by the financial institution should be entered in line 40.

The foreign tax not yet withheld should be entered in line 41.

In some cases, instead of the actual tax, a fictional foreign tax is credited; then enter this amount in line 42.

Section 9

As mentioned, the previous section was for the tax deduction amounts for gains from lines 7 to 25, which could be the case for most people. Section 9 is about taxes on capital income corresponding to lines 28 to 34.

These are again special cases mentioned in section 6, so if you think it applies to you, then enter the tax values here.

Sections 10, 11 and 12

In most ordinary cases, we have now reached the end. Although we still have a few sections left, these are usually exceptional cases. They deal with participation in foreign companies, family foundations, and tax deferral models. Going through them would be too extensive and not relevant for most of you. If these sections do apply to you, I hope you have a tax advisor by your side because there is a lot that can go wrong here.

Tax topics can be complicated in Germany, and I always felt that there is a real shortage of information and guidance in English. I suffered when I started doing the taxes, and that was one of the main reasons why I started creating tax videos on YouTube. Even though YouTube is a great platform for me to share what I know, it has its limitations.

I feel there is a real need to build a community outside of YouTube to discuss German finance topics, including taxes, where people like you and me can come together to collectively share their experiences. I will also be uploading exclusive videos of how I do tax declarations every year for my personal income, capital income, and business income.

If you’re interested in being part of this community, click the link to join the waitlist. For now, I want to limit it to a few people to keep it manageable. So do register earlier, if you want to be part of it. I’ll send you updates as they come.

Disclaimer: The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. It is important to do your own analysis before making any investment.

Anlage - KAP | When & How To Fill Out? Step-By-Step Elster English Tutorial